Infrastructure finance fit for the future

SFW Communications has been working with our clients Public Power Solutions and Abundance Investment to help make the UK’s first council solar bonds and green energy ISA a success.

Thanks to solar developer Public Power Solutions (PPS) working in partnership with leading peer-to-peer finance company Abundance Investment, ordinary people have been able to invest directly in two council-owned solar farms and can now hold their investments tax-free in an Innovative Finance ISA.

PPS is a wholly-owned company of Swindon Borough Council and devised a unique blend of public sector and community investment to finance a 4.8 MW solar farm on council-owned land at Common Farm in Wroughton. The community element came via Abundance, who launched the UK’s first council solar bond - a debenture instrument with a minimum investment of just £5 so it is open to almost anyone – raising £1.8 million from the public. SBC invested £3 million alongside the public to complete the finance needed to build the project.

Things moved quickly: the bond offer, launched in March 2016, was so successful it closed a month early, with the solar farm built and generating power by July. Local benefits aren’t limited to the supply of green power: 65% of profits from the solar farm are going towards funding community initiatives, with the remaining 35% direct to the Council.

Building on this success, a second Swindon council solar bond offer was launched in November 2016 to finance a 5MW solar farm at Chapel Farm, a former landfill site near Blunsdon. This marked another first for Abundance: following new legislation, the bonds could be held in the UK’s first green energy Innovative Finance ISA which allows ordinary people to invest directly in renewables, tax-free. 

This one went even faster. Ten days after launch, it had achieved over £1 million in investment. It closed six weeks early, selling out just before Christmas, raising a total of £2.4 million from 800 investors. While all investments carry an element of risk, both bonds offered investors an average annual return of 6% over 20 years which proved highly attractive especially while interest rates are at record lows.

All councils need to find new and innovative ways to fund the vital work that they do for their communities, and Swindon now has a template other local authorities are looking to follow. As well as the direct return on its investment, from selling the electricity generated and the Renewables Obligation subsidy, the council will earn an additional £1 million in business rates and rent by 2020 from owning both solar farms.

Equally important, it’s taking Swindon to 80% of its goal to install 200MW of renewable capacity by 2020, enough to meet the equivalent electricity requirements of every home in the Borough. 

THE CASE FOR SOLAR

The following article by Sophy Fearnley-Whittingstall was published in the April 2015 issue of Wiltshire Life Magazine

At the start of the year Wiltshire Wildlife Trust’s community energy arm (WWCE) raised almost £3 million pounds in investment to build the Braydon Manor Farm solar array near Purton. Its second solar development in the county, it will be one of the largest community-owned solar farms in the UK. With nearly 90% of the investment coming from residents of Wiltshire and neighbouring counties this was a resounding endorsement of solar energy locally. But why is one of the Wildlife Trusts getting involved at all?

WWCE says it is motivated by concern about the impact of climate change on wildlife; it identified solar PV as the most appropriate renewable energy technology because it also offers huge potential benefits for biodiversity and ecology.

Wiltshire’s rolling farmland and open landscapes mask a hidden problem common to many rural areas – in the past 50 years some 60% of the UK’s wildlife species have declined (2013 report The State of Nature). Since the 1930s, lowland wildflower meadows have shown a staggering fall of 97%. The drop in numbers of pollinators such as bees has been well documented and is particularly worrying given their essential role in food production.

However, solar farms that are managed to promote biodiversity have been proven to counter this. The panels typically cover only 30% of the land area, occupying a footprint of just 5%, leaving plenty of space for other land uses. Simply giving the land a rest from intensive farming offers benefits for wildlife, but taking a proactive approach by sowing appropriate wildflowers and native grasses yields a dramatic improvement in biodiversity.

The dense hedgerows which surround solar farms and screen them from public view also provide important habitats for wildlife; adding ponds, bird and bat boxes and hibernacula to provide homes for reptiles and amphibians transforms a solar farm into a wildlife haven for 25 years.

A study carried out by leading ecologist Dr Guy Parker during summer 2013 at Westmill solar farm near Swindon showed three times as many bumblebees and a tenfold increase in butterflies compared with a nearby control plot. Apparently bees really like the contrast of light and shade provided by the panels. The variety of plant species was also far more diverse - with the solar farm hosting 65 (of which 37 were considered rare) compared with just four on the control plot.

Maintenance is simple with sheep grazing around the panels in autumn and winter, ensuring the land stays in agricultural use and continues to be used for food production as well as generating clean energy. So the accusation that solar farms impact food production is unfair – climate change and the decline in pollinators pose a far greater threat and can be mitigated by solar farms.

Good solar developments also bring tangible financial benefits to the communities where they are located. Many developers voluntarily offer a community fund: an annual index-linked payment relating to the size of the solar farm which can make a real difference to cash-strapped parish councils. Community ownership can offer even more; WWCE’s Braydon Manor array is expected to generate over £2 million over 25 years to be shared between the community and Wiltshire Wildlife Trust. Some companies also work directly with nearby schools to use the solar farm for science learning.

Rising energy costs and extreme weather events put increasing economic pressure on farmers to diversify. By providing them with a constant, predictable income, a solar array helps maintain farming as a local way of life, preserving the agricultural character of the local landscape for the future. Better a temporary solar farm than a permanent housing or industrial development. The panels are easy to screen in the landscape and do no lasting damage – after 25 years the land can be completely restored.

Wiltshire is lucky to be home to a number of solar businesses who prioritise good ecology and biodiversity at the sites they develop as well as offering excellent community benefits, such as Solstice Renewables in Aldbourne, Good Energy in Chippenham and Public Power Solutions owned by Swindon Borough Council.  

It’s no wonder that the value of solar farms is recognised not only by Wiltshire Wildlife Trust but also by the National Trust, the RSPB, Buglife, Friends of the Earth and the Bumblebee Trust. With 40 solar parks in the county already built or approved, capable of powering a third of Wiltshire’s homes, solar is something to be celebrated.

What people really think about solar farms

I am lucky enough to live next to a solar farm. I cannot see it. I cannot hear it. But I know that during daylight hours I am getting clean, green electricity from it, and that makes me feel good.

There’s no wire coming from the solar farm into my house – the electricity gets fed into the grid through a nearby sub-station. But because of ‘distributed generation’ the power flows to meet the closest source of demand, which is my house and my neighbours’ homes and businesses – the equivalent of 3,000 homes for this 10 MW site. It’s a much more efficient way of generating energy compared to large centralised power stations because it avoids the transmission losses of 8% -10% that occur when power is transmitted across long distances.

My local solar farm, April 2014

It’s also a good use of land. Where I live feels rural and secluded but it’s actually on the edge of a medium-sized market town. New development is rife. In the last two years I’ve seen planning permission granted to build an enormous Tesco, a housing estate and an industrial estate on the green fields around me. Solar is a great alternative – the land will stay in agricultural usage, guaranteed for 25 years, while also generating renewable energy. What’s not to like?

 But, I work in the industry, so I would say that wouldn’t I? I wanted to find out what others think, so I asked my brilliant community Facebook page (almost 5,000 likes), where people aren’t shy of offering their opinions on local issues, from the best pub for a Sunday roast to people’s parking habits.

 These were a few typical responses:

 Sue E: “I knew it was going to happen but I didn’t know it was almost finished already. Brilliant as far as I am concerned. We need to invest more in renewables.”

 Des D: “Didn’t know it was there but anything to improve sustainability will get my vote.”

 Gary T: “Hadn’t noticed but now I know I think it’s brilliant. More please.”

 Overall, 31 people commented with 85% saying they liked it, or hadn’t noticed it – replicating national levels of support for solar farms according to DECC’s regular public attitude tracker surveys.

With this in mind, I don’t understand why Greg Barker MP is now reviewing support for large-scale solar. In a recent letter to MPs he said: “I do not want uncontrolled expansion of solar on the countryside … we mustn’t allow large inappropriately sited solar farms to undermine public support”. His concerns aren’t borne out by the evidence – anecdotal or empirical.

Last week another 10 MW project I was involved with breezed through planning with only one objection (the colour of a fence – easily fixed). Residents of Wroughton, near Swindon, are outraged that ‘their’ 40 MW project on a former airfield has been called in by the government for a public inquiry.

The photograph shows ‘my’ local solar farm, taken from a local beauty spot. It blends in with the landscape. I love it – and so do the vast majority of my neighbours. And that’s what people really think about solar farms.

Sophy Fearnley-Whittingstall